Who Do You Call? Fraud, Mismanagement and Rule-Breaking

In most instances, the board or management team of a condo or HOA is equipped to handle the wide variety of issues that arise day-to-day, from a leaky roof to dealing with municipal bureaucracy. There are other, bigger issues—things like embezzlement and fraud, for example—that require experienced outside professionals to resolve.

“Directors in Florida are held to a standard of care that requires them to seek and rely upon the opinions of trained professionals where appropriate,” says associate attorney Jonathan S. Goldstein of the Miami-based law firm of Haber Slade. “In many instances this includes legal counsel, because there is an element of legal compliance and there are potential risks and liabilities in taking various types of actions.”

The State of Florida provides a number of rights for condominium owners through Chapter 718, Florida Statutes (F.S.), also known as the Condominium Act, notes Chelsea Eagle, the deputy director of communications for the Florida Department of Business & Professional Regulation (DBPR). Board members, under this provision, are held to account.

Eagle points to the Act, which states: “A director is expected to carry out his or her powers and duties, as any other ordinarily prudent person would do under reasonably similar circumstances. Directors have a fiduciary relationship with the unit owners, and have the responsibility to act with the highest degree of good faith and to place the interests of the unit owners above the personal interests of the directors.”

She continues that DBPR is a regulatory agency that enforces administrative law, as opposed to criminal law, for more than one million of Florida’s businesses and professionals. “These include community association managers, condominiums and cooperatives,” she says.

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2 Comments

  • We live in a small coop campground on Big Pine Key with 18 shareholders and 5 BOD. The BOD broke the law. 719.1055 3 (b)The association may change the configuration or size of a unit only if the action is approved by the affected unit owners and by two-thirds of the total voting interests of the cooperative. They took more than 1 foot of lot 15 away with no discussion or vote. This BOD needs to be reprimanded. They are not above the law. Please advise me concerning this matter.
  • I reside in a 55+ community that is a co-op. The community is predominantly shareholders along with condo (leased homes). The property manager’s (was appointed by the Board of directors) husband was laid off. Over the past two years the Property Manager’s husband has purchased three pieces of property within the community for a cost much less than the value of the property and sometimes less than than value of the lot. He then flips the home and sells it at a huge profit. I strongly suspect the Property Manager is providing confidential information on available properties to her husband. There is record that he purchased a community owned property for an amount less than the lot and flipped the home on the lot. The BOD President would have to sign off this purchase. The community therefore lost revenue in the purchase and future rental fees. The current Employee Handbook clearly prohibits an employee from such behavior. My question is 1. Is this a possible crime? 2. Who do I report this situation to? I know the BOD President is aware of this and reporting to them is not an option Thank you